Why the giant fell is divided into five stages of gradual decline, which deserves vigilance and deep thought.

Why the giant fell is divided into five stages of gradual decline, which deserves vigilance and deep thought.

How did the powerful fall? Why did some companies never give ln? My literal translation is "How did big companies fall?"

This book, written by Jim Collins in 2009, has been translated into Why Giants Decline and How Giants Fall. Although ten years have passed, watching a big company fall and a big company rise, many truths in the book have become more and more shining after years of baptism.

Jim Collins is regarded as one of the fifteen people who influenced the management of enterprises in China. He and Jerry Poles co-authored "Building Evergreen Foundation", which became a compulsory course for most enterprise management talents in China. How the mighty power fell, and why some companies never gave ln, is another masterpiece of "From Excellence to Excellence" after "The Foundation is Evergreen".

Any dynasty, any organization, any enterprise, no matter how prosperous and successful, will easily decline if it is not careful. However, the decline of enterprises can be avoided, discovered and even reversed. The decline of an enterprise is like a person's disease, which is not easy to find in the early stage, but easy to cure and recover, with obvious symptoms in the later stage, but difficult to treat, and it is too late to find it, or even a terminal disease. An enterprise without drugs is like a person's body.

Excellent enterprises may also fall and wrestle, or even fall heavily, but unlike ordinary excellent or successful enterprises, excellent enterprises can not only get up again, but also grow stronger than before.

The decline of enterprises is mostly caused by themselves, and the fate of the turnaround is still in their own hands. The decline of enterprises can be divided into five stages (periods):

(1) Success leads to complacency and self-recognition, and nothing is impossible.

(2) Uncontrolled and arbitrary expansion, the pursuit of larger scale, faster growth, more false reputation, etc. , leading to the growth of enterprises far exceeding the speed of recruiting and cultivating key talents.

(3) Turn a blind eye to the risk crisis. Even if there are some internal disease warnings, the external performance is still good, which leads to the misjudgment of "these problems are only temporary", "the problems are not so serious" and "there is no fundamental problem".

(4) I am in a hurry to see a doctor and look for magic medicine everywhere, such as appointing attractive new leaders, launching bold but untested new strategies, radical transformation, corporate culture revolution, and mergers and acquisitions outside the industry. There may be some effect at first, but it won't last.

(5) Surrender or perish. The longer you stay in the fourth stage, the more resources you consume, the more financial advantages you lose, the lower staff morale, and the serious decline in business to a certain extent, which has no influence in the industry. Even the leaders gave up hope, and then simply sold the company or even closed down.

Jim Collins further pointed out the symptoms of various stages of enterprise decline, helping enterprises to diagnose themselves, find them early, treat them in time, and recover as soon as possible, even stronger than before.

The first symptom of enterprise decline:

(1) Seeing that success is inevitable, employees begin to believe that no matter what the company does or doesn't do, it will be successful and will last forever. (2) Ignoring the original successful flywheel effect, due to external challenges, adventures and increased opportunities, resulting in the loss of attention, ignoring the basic skills of the original successful flywheel, we must first plant strength from continuous improvement and performance improvement in order to make rapid progress.

(3) "What to do" replaces "Why", and we are lost in "We are successful because we have done these special things", instead of discussing "We are successful because we understand why we have to do these special things, and at the same time understand that these things are not omnipotent and under what circumstances we will fail"

(4) With the decline of learning ability, the curiosity, thirst for knowledge and learning ability that leaders must have to achieve an excellent entrepreneur gradually decline.

(5) Regardless of the luck component of success, employees attribute their success to the excellent physique of the enterprise, their own efforts and good leadership of the leaders, ignoring the possible luck component.

The second stage of enterprise decline:

(1) Pursue growth blindly, and you can't tell whether to pursue greatness or Excellence. The growth pressure brought by success, coupled with a series of unrealistic expectations and unattainable goals, has pushed employees, organizational culture and operating system to the point of collapse.

(2) unorganized, unconnected and leaping growth or transformation.

(3) The proportion of "right" talents in key positions is reduced, which violates Packard's Law. The growth rate of the company is faster than that of recruiting or cultivating talents, which leads to the decline of the proportion of "right" talents in key positions and returns to the fundamentals. Leaders must clearly understand:

3. 1 Those positions are the key positions of the enterprise.

3.2 What percentage of key positions are "right" people,

3.3 The planning content and implementation degree of the promotion ratio,

3.4 If the "right" person leaves the key position, what are the countermeasures to fill this position?

(4) the discipline of cost control is destroyed, and the culture that does not emphasize discipline (employees, thinking and action) returns to the root of cost reduction. It is to kill the goose to get the egg and raise the selling price to solve the pressure of increasing costs.

(5) organizational bureaucracy destroys discipline culture, and bureaucracy destroys discipline culture.

5. 1 Require employees to abide by a consistent system.

5.2 Under the institutional framework, employees are allowed to enjoy full freedom and take responsibility, which leads employees to shirk their responsibilities.

(6) There are problems in the transfer of rights, whether it is (a) failure to plan the succession plan or improper planning, (b) slow start of succession plan, (c) failure of internal successor training, (d) wrong choice of successor, or (e) resignation or death of successor. If the leader fails to transfer power smoothly, the enterprise will embark on the road of decline.

(7) Personal interests override group interests, and those in power leave more fame and privileges to themselves and the team or department, while pursuing short-term interests and neglecting the investment in building a lasting foundation.

The third stage of enterprise decline:

(1) Report good news but not bad news, ignore negative information, and expand the interpretation of positive information and external compliments.

(2) Make bold bets, set lofty goals without trial and dialectic, and some leaders go their own way regardless of the facts. (3) Take great risks and interpret ambiguous data or information with excessive optimism.

(4) The kinetic energy of healthy teams is gradually weakening, mainly because of the autocratic management, which leads to the reduction of the quality and quantity of benign dialogue and debate.

(5) shirking responsibility, in the face of setbacks or failures, leaders do not self-review, but blame others and blame external factors.

(6) Constantly reorganizing the organization, leaders do not bravely face the cruel reality, but constantly reorganize the organization. Employees are tired of coping with internal political struggles and have no time to solve the challenges of the external environment.

(7) the top leaders are decoupled from the grassroots.

The fourth stage of enterprise decline:

(1) In a series of silver bullets, leaders tend to take radical and huge actions to reverse the situation, for example, through acquisitions, new strategies and exciting innovations, expecting to achieve breakthrough growth.

(2) Seize charismatic leaders or foreign "monks" as saviors to face challenges and decline.

(3) panic and impatience, rather than calm, thoughtful and disciplined in the face of cruel reality, employees show hasty and emotional reactions and are on the verge of panic.

(4) radical and grandiose changes, the company is full of new plans, new corporate culture and new strategies, and leaders are busy using beautiful words and slogans to promote the momentum, "encourage" and "unite employees"

(5) Publicizing the expected results, leaders broaden their horizons, underestimate the time and difficulties required for reversal, set the expected results too high, but fail to achieve them, leading to a vicious circle of over-commitment and unrealizability.

(6) The initial performance can't be maintained, which leads to a series of disappointments, and the organization finally can't accumulate growth momentum. (7) Confusion and cynicism, employees began to fight for no reason, and their core values were gradually eroded by their own business. The company has become just another workplace or a place where they get paid, and employees begin to lose confidence in their ability to win and doubt their core values and vision.

(8) Long-term transformation has encroached on the financial advantage, and every failed plan consumes resources, resulting in reduced cash flow and liquidity, repeated rectification of the organization, but fewer and fewer options, and strategic decisions are even gradually affected by the surrounding environment.

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